An Installment Purchase System and Its Comparison in a Deteriorating Economic Order Quantity Model

Authors

https://doi.org/10.48314/anowa.v2i2.56

Abstract

In this paper, we have proposed an EOQ model under two-level trade credit with installments specially the Equal Monthly Investment (EMI) policies. Installment is a financing arrangement that increases the sales for the business manager and it is very much beneficial for the consumer, specially for the higher value product. Here, the supplier offers a partial credit period M and the retailer offers a permissible delay period N to its customers. The customer pays a fraction α of the amount at the time of purchasing the product and rest (1− α) by R1 installments within the time N. This study investigates the cases and subcases in details under the conditions N ≤ M and N ≥ M respectively and generalizes some of the literatures such as Soni and Joshi (2013), Mahata and Mahata (2011), Teng (2009) etc when the number of installment is one. We have developed a profit maximization problem on retailer’s inventory model for different cases and subcases. Also, we have shown that the average profit maximizes with installment purchase system than delay-in-payment system and increases with more down payment. Finally, numerical illustrations and its comparative study with the existing methods are performed to justify the novelty of the proposed approach.

Keywords:

Inventory, Economic order quantity, Partial trade credit, Installment

References

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Published

2026-09-05

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Vol. 2 No. 3 (2026): Annals of Optimization With Applications (ANOWA)

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How to Cite

Karmakar, S. . (2026). An Installment Purchase System and Its Comparison in a Deteriorating Economic Order Quantity Model. Annals of Optimization With Applications, 2(3), 171-187. https://doi.org/10.48314/anowa.v2i2.56

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